Modeling Wealth Inequality

Most present-day societies exhibit large wealth inequalities. In particular, wealth inequality in the United States has increased significantly since the early 1970s, and the gap between the richest 1% and the remaining 99% is the greatest since the 1920s. The existence of wealth inequality has become so obvious that its existence is no longer in dispute.

What are the reasons for the widening gap between the very rich and everybody else? Why does wealth inequality occur? There are likely many political, economic, and cultural reasons. We could learn how some people became very wealthy and what government policies contribute to greater or lesser inequality.

We will see that simple models of economic activity show that inequality is a general and natural occurrence and is very difficult to prevent. Unlike climate models, for example, which require much background in science and very powerful computers, the models we will discuss can be simulated on a smart phone, tablet, or a laptop, and we encourage you to play with the simulations and explore their results.

Introduction to The Model

An introduction to a simple model of economic activity predicts that inequality is a general and natural occurrence and is very difficult to prevent.